Biotech executives were on the prowl a couple weeks ago in San Francisco, many of them urgently seeking tens or hundreds of millions of dollars from Wall Street. But one of the fun, offbeat ideas I encountered during my trip was from a Kalamazoo, MI, entrepreneur seeking to nail down his first $5 million for a startup called Axonia Medical. This company is betting it can treat nerve damage in arms and legs without touching an embryonic stem cell.

Axonia’s president and founder, Harry Ledebur, told me about his dream for this regenerative medicine startup during a break between meetings with investors at the JP Morgan Healthcare Conference. He’s a molecular and cell biologist by training, so he knows the difference between an axon and neuron (more on that later). But he also has an unusual personal experience battling the problem his company is seeking to solve, as someone who has lost a leg because of a peripheral nerve injury.

If Axonia can raise the cash it seeks, the company will be off and running with a new approach to regenerative medicine. Several companies, like Menlo Park, CA-based Geron (NASDAQ: GERN) have made headlines with efforts to treat spinal cord injuries through embryonic stem cell-based approaches to regenerate new nerve cells. But these approaches are still controversial, because of the way embryonic stem cells are obtained. Axonia is seeking to help reconnect the wiring of the central nervous system a different way, essentially by using a laboratory device to grow and stretch out the key cells—known as axons—and then implanting them in an injured limb.

If these implants can take hold and spur growth of new axons in clinical trials—still a very big if—then Axonia could someday offer a new treatment strategy for the 50,000 to 100,000 people in the U.S. who undergo surgery for moderate to severe nerve damage in their arms and legs each year. Eventually, it could also be a part of combination treatment for spinal cord injury, traumatic brain injury, and stroke, Ledebur says. Axonia’s investor prospectus says the market opportunity for peripheral nerve injury alone—the most likely use of the technology at first—is $1.2 billion a year.

“This is one of the coolest technologies I’ve seen in a long time,” Ledebur says. “It’s a business opportunity that could be transformative.”

Harry Ledebur

Ledebur found the idea for Axonia while sifting through more than 2,000 different biotechnology proposals from universities and research centers, as part of his work as an executive in residence for Southwest Michigan First, a Kalamazoo-based economic development organization that seeks to recruit and build companies to the region. The Axonia technology, developed in the lab of Douglas Smith at the University of Pennsylvania, stood out for him.

The concept, as the name suggests, is all about axons. These are the long, thin cells that act as extensions of neurons, carrying electrical signals throughout the body. While humans might be able to naturally regenerate a lot of oxygen-carrying blood cells after they get knocked down by cancer chemotherapy, axons aren’t nearly so resilient, which isn’t news to anyone who has suffered a spinal cord injury or a nerve damage to an arm or leg, like combat veterans.

Scientists have long struggled to find ways to even grow these long unwieldy axons in a conventional cell culture in a lab. They can grow to be as long as 30 meters … Next Page »